20 January 2017, Lagos – A financial expert, on Thursday described the oil price benchmark adjustment by the Senate in the 2017 budget from 42.5 dollars per barrel to 44.5 dollars per barrel as realistic.
The Head of Banking and Finance Department, Nasarawa State University, Keffi, Dr Uche Uwaleke, said that the adjustment in the oil price benchmark made by the Senate in respect of the 2017 budget as contained in the 2017-2019 Medium Term Expenditure framework was realistic in view of expected rise in oil price.
“This is in view of the fact that oil price forecast by reputable international energy agencies such as the U.S Energy Information Administration is above 50 dollars per barrel on the average for 2017 on the back of the OPEC agreement to effect output cuts this year.”
He added that the oil benchmark market adjustment if properly harnessed, would reduce the budget deficit of over N2tn.
He said, “At an exchange rate of N305 to the dollar used for the 2017 budget proposal, the oil price benchmark adjustment has the effect of reducing the budget deficit of over N2tn.
“It can also extend the size of borrowing requirement to finance the deficit.”
Uwaleke also called on the National Assembly to immediately commence consideration of the 2017 budget proposal, with a view to ensuring its early passage.
“Now that the MTEF has been approved, I expect the National Assembly to commence immediately the 2017 budget proposal consideration with a view to its early passage.”
The Senate on Jan. 18, approved the 2017-2019 MTEF and Fiscal Strategy Paper, 2017 wherein it pegged the projected price of crude at 44.5 dollars per barrel.
This was against the 42.5 dollars proposed by President Muhammadu Buhari in the budget.
The approval by the House of Representatives followed consideration and adoption of the report of its joint committees on Appropriation, Finance, and National Planning and Economic Development.
The other committees include, Legislative Budget and Research, Aids, Loans and Debt Management, which was presented by the Finance Committee Chairman, Babangida Ibrahim (APC, Katsina).
The House also adopted the recommendation of the report that the exchange rate to the U.S dollar be pegged at N305 per dollar as proposed by the executive for the 2017 budget.
It also urged the Central Bank of Nigeria (CBN) to initiate measures that would close the gap between the parallel market and the official exchange rate.
The report also recommended the adoption of N5.122tn as revenue projection from non-oil commodities in 2017, while calling on revenue generating agencies to intensify their drive in order to boost the non-oil components of the revenue.
The recommendation also adopted N807.57bn for Federal Government independent revenue for 2017 as well as a review of the legal framework of relevant MDAs and government owned enterprises.